view of the fact that additional and unrequired provisions were included in the bond now before the court, I deem an examination of the contract warranted.
Where there is a necessity for construction, regard may be had for the entire statute, the governmental regulations framed to carry out the statute, and the language of the bond. O'Kane v. Lederer, supra. In this instance resort to the particular statute does not greatly facilitate the construction, as it merely says that the bond shall be "for the faithful discharge of the duties assigned to him by law or regulations; and the penal sum of said bond shall not be less than $5,000, and said bond shall be renewed or strengthened as the Commissioner may require." The storekeeper-gauger is provided to facilitate and, in a sense, effect the collection of internal revenue forthcoming from distillers. Some significance might be attached to the provision that the penal sum can be increased at the option of the commissioner. That is, this provision indicates that the commissioner may raise the amount where such is deemed necessary to safeguard the United States' interests involved.
Resort to the related provisions demonstrates that there are specific penalties which can be imposed on storekeeper-gaugers. For fraudulent inspection, gauging, or proof, a storekeeper-gauger must pay a penalty of $1,000, and be fined from $500 to $5,000, and imprisoned not less than three months or more than three years. 26 U.S.C.A. Int.Rev.Code § 4021(b). For unlawful removal of distilled spirits from a warehouse a fine of $200 to $5,000 and imprisonment for three months to three years shall be imposed. 26 U.S.C.A. Int.Rev.Code § 2913.
The language of the bond, though more inclusive than that of the statute, parallels the statute's words in conditioning its obligation on honest and faithful discharge of duties. In addition, it includes a declaration of a condition that all fines and costs imposed on the storekeeper-gauger, as such, be paid. This recommends a construction that the sum was designed to be sufficient to guarantee satisfaction of normally expected losses and fines, rather than to operate as a defined penalty or forfeiture. This construction is supported by the presence of penalties above noted severe enough, themselves, to deter employees from violations.
Recurring now to the specific question concerned, I cannot but conclude that the amount named in the statute and bond represents security for, or a limit, and not a measure, of liability. There was no license or privilege conferred on the principal, who, although a private citizen, was "bonded" as a civil servant, nor was he otherwise specifically enjoined to comply with the law.
I find support for my construction of and conclusions concerning the instant bond in the case of United States v. Zerbey, 271 U.S. 332, 46 S. Ct. 532, 70 L. Ed. 973. The similarity of the conditions of this bond and the one there involved justifies a resort to the decision and opinion of the Supreme Court in that instance.
There is a further question. That is, whether the defendant is discharged from liability to the extent of $757.36, the amount of money belonging to Hamilton which the government held on the date of Hamilton's dismissal and subsequently paid to him, instead of applying it to obligations owing the government. The plaintiff urges that the government was without the power to withhold the money, which represented salary deductions in the Civil Service Retirement Fund, and which was properly payable to Hamilton when he was dismissed. True, the government cannot allow an attachment or assignment of the deductions, nor a levy against the same by private parties. Furthermore, it can well be questioned whether the United States could, for any obligation owing to it, attach the retirement fund credit of one of its employees who was continuing in its employment. But, when an employee has been dismissed, and the portion contributed by him is payable to him, I am decided that a different rule governs, that the United States can withhold an amount equal to the arrearage. There then remained no bar to the application of this amount to the indebtedness of Hamilton to the United States. To these facts can be applied the recognized principle that a release of a fund or other security for satisfaction of the principal debtor's obligation discharges the surety pro tanto. Taylor v. Continental Supply Co., 8 Cir., 16 F.2d 578; Southern Pac. Co. v. Globe Indemnity Co., 2 Cir., 21 F.2d 288.
Conclusions of Law.
1. The United States is entitled to recover only the actual damages sustained.
2. The defendant surety is discharged from liability to the extent of the amount of money belonging to Hamilton which the United States held on the date of Hamilton's dismissal and subsequently paid to him.
3. Judgment should be entered for the defendant.
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